Marketplace Globalist Quiz: Tobacco Production King

Tobacco continues to pose one of the world’s largest public health challenges, killing 5.4 million people each year. With governments and international health organizations stepping up their efforts to curb tobacco use, we wonder: Which country produces more tobacco than any other?
The United States has slipped to fourth place among the world’s top tobacco producers. Its output totaled 363,000 metric tons in 2008 — or 6% of global production, according to the latest available data from the UN Food and Agriculture Organization (FAO).

Tobacco has been a major cash crop for the U.S. economy for hundreds of years. The United States was the world’s largest tobacco producer as late as 1975, but U.S. production has since declined, while production in emerging market economies has soared.

Prison officer allegedly tries to sneak in marijuana, tobacco

The nose of a drug-sniffing canine allegedly found more than an ounce of marijuana and bags of raw tobacco on a prison officer trying to sneak the goods into Maury Correctional Institution this weekend.

Edwin G. Edwards, 29, will make his first appearance in Greene County District Court Friday for felony charges of possession of a controlled substance on prison grounds and possession with intent to sell and distribute a controlled substance and misdemeanor charges of possession of drug paraphernalia and providing tobacco to an inmate.

Thanks to the astute pooch, officers recovered 37.5 grams of marijuana, five to six bags of tobacco and rolling papers from Edwards’ lunch bag and body shortly after 7 p.m. Sunday, said Capt. Daniel Hawkins, the arresting officer with the Greene County Sheriff’s Office.

Hawkins assisted officials with the N.C. Department of Corrections in a routine unannounced drug screening over the weekend at Maury Correctional Institution of all visitors, staff and vehicles entering the prison property, said Keith Acree, spokesman with the DOC.

“The dog hit on the marijuana when he entered facility and lined up in a row with everyone else to be searched,” Hawkins said of the arrest.

Edwards, a correctional officer at the state prison since June 2008, resigned Monday. He earned an annual salary of $28,484, Acree said.

“We do interdictions periodically as part of our strategy to keep drugs out of prison facilities,” Acree said.

Hawkins placed Edwards, of Greenville, in the Greene County Jail under a $10,000 secured bond. He has since posted bail.

New 'dissolvable tobacco' products up mouth disease risk

Do You Know the Impacts of Smoking? Smoking and Tobacco Use. More... Healthline.com
A new study has suggested that the new genre of 'dissolvable tobacco' products - pop-into-the-mouth replacements for cigarettes - has the potential to cause mouth diseases as well as other problems.

John V. Goodpaster of the Indiana University Purdue University Indianapolis and colleagues analysed the complex ingredients in the products and found that it contained mainly nicotine, along with finely-ground tobacco and a variety of flavouring ingredients, sweeteners and binders.

According to them, the first dissolvable tobacco products in pellet, stick and strip forms went on sale in 2009 in test markets in Indianapolis, Ind., Columbus, Ohio, and Portland, Ore.

These products are advertised as smoke and spit-free, but nicotine is a toxic substance linked to the development of oral cancers and gum disease, said Goodpaster.

Health officials are concerned about whether the products, which dissolve inside the mouth near the lips and gums, are in fact a safer alternative to cigarette smoking.

The researchers, however, said there are possibilities that the nicotine in these products may accidentally poison children.

"The packaging and design of the dissolvables may also appeal to children, and some dissolvables, such as Orbs, may be mistaken for candy," said Goodpaster.

Other ingredients in dissolvables have the potential to increase the risk of tooth decay and one, coumarin, has been banned as a flavouring agent in food because of its link to a risk of liver damage.

"The results presented here are the first to reveal the complexity of dissolvable tobacco products and may be used to assess potential health effects," said Goodpaster.

Strategies To Exploit Uncertainty in Tobacco

After taking control of tobacco regulation in 2009, the U.S. Food and Drug Administration (FDA) is investigating the use of menthol in cigarettes. Its tobacco panel, the Tobacco Products Scientific Advisory Committee (TPSAC) is due to report its findings by March 23, 2011, and the FDA will issue a binding ruling after that. We envision three ultimate outcomes: menthol is banned (6% probability); no action is taken against menthol (16% probability); no ban, but tighter regulation (78% probability).
With a ban on menthol a potential outcome, investors have reason to harbor concerns about the future of Lorillard (LO
), the maker of Newport menthol cigarettes. However, based on our conversations with anti-smoking lobbyists, FDA officials, tobacco executives (including Altria (MO
) CEO Mike Szymanczyk and Lorillard CFO David Taylor), and representatives of smokers' rights groups, we think a ban is unlikely for the following reasons: The scientific evidence being considered by TPSAC is ambiguous; A black market for menthol cigarettes could emerge, limiting the FDA's ability to oversee the category; Tax revenues for governments at all levels would be impacted; Eighty percent of African-American smokers consume menthol products, so this issue has a racial component.
On the other hand, the anti-tobacco lobby is vociferous, and with the TPSAC being stacked in favor of individuals with anti-smoking positions, we view the status quo as a very unlikely outcome as well.
To exploit the uncertainty in the menthol category, we've outlined three investment strategies across multiple securities and risk thresholds:
Debt: Buy Lorillard bonds. The credit market appears to be pricing in a worse scenario than the equity market, even though we think a bankruptcy scenario is highly unlikely.
Equity: Wait for headline risk to provide an entry point. A negative TPSAC report could provide an attractive entry point to Lorillard's equity, which appears to be valued on a probability-weighted basis.
Paired equity trade: Buy Lorillard, sell Reynolds American (RAI
) stock. Lorillard's stock should rally harder in the absence of Draconian measures, while a short position in Reynolds should cushion the blow in the event of a ban because we think it will not be able to retain the majority of its revenue from Kool menthol cigarettes.

W.Va. tobacco tax hike wins Senate panel approval

West Virginia would nearly triple its cigarette tax and hike its other levy on tobacco to fund health care needs under a measure that cleared a Senate committee hurdle Thursday.

The Senate Finance Committee must now review the legislation amended and advanced by the chamber's Health and Human Resources Committee on a non-unanimous voice vote.

The bill would raise the per-pack tax on cigarettes from 55 cents to $1.55. The tax rate for other tobacco products would climb from 7 percent to 50 percent of their wholesale price.

Officials estimate $128.8 million in annual revenues. As amended, the bill would commit $50 million of that toward public retiree health costs for 10 years. Another $40 million annually would benefit Medicaid, while $6 million would fund anti-tobacco efforts and $1 million would aid a proposed school of public health.

Of the remaining annual revenues, 30 percent each would go to oral health and substance abuse programs. Nearly a quarter would fund in-home senior care, and the rest would help early childhood development efforts.

West Virginia's cigarette tax rate ranks 44th among states, according to 2010 figures from the Campaign for Tobacco-Free Kids. That's still higher than neighboring Virginia, which sports the lowest tax at 30 cents per pack.

Hiking West Virginia's tax to $1.55 would give it the 22nd-highest rate, barring changes by other states. That would be higher than neighboring Kentucky's 30-cent tax and Ohio's $1.25 tax, but still lower than the $1.60 charged by Pennsylvania and the $2 by Maryland.

Bill critics warn that higher taxes will cost retailers in border counties revenues and jobs. Sen. Truman Chafin, D-Mingo, warned that businesses in his district would suffer at the hands of competitors in neighboring Kentucky and Virginia.

"We don't have any supermarkets left in our town now," said Chafin, of Williamson. "You're just sending a signal to get out of this state and do all your shopping on the other side from West Virginia."

Council on Indian Affairs Takes Up Debate on Cigarette Tax

The debate over the possibility of a significant bump in the cigarette tax moves to the front burner today. The Idaho Council on Indian Affairs is expected to take up the discussion, which includes a plan to increase the tax on a pack of smokes from 57 cents to $1.25. Such an increase would be expected to generate nearly $50 million, the proposed shortfall for Health and Welfare's Medicaid programs.

Idaho's Native American reservations are not required to uphold the tax but lawmakers are eager to get the tribes on board, because a bump in price could cause a dramatic disparity between the price of cigarettes sold on and off reservations.

According to the American Lung Association, Idaho's current cigarette tax generates approximately $47 million in revenue. So why wouldn't a 73-cent bump raise more than $50 million? Because the increase is also expected to cut down the amount of cigarettes sold in Idaho.

Cigarette Smuggling Big Business At Costa Rica's Border With Panama

The anti-tobacco legislation applied in Panama last year, which increased the price of cigarettes, had led to an increase in smuggling of tobacco products from Costa Rica.


The president of the Cámara Costarricense de Restaurantes y Afines, Edgar Marin, says the situation has led his group to file charges with the Ministerio de Salud and the Ministerio de Seguridad.

Marin explained that the Panamanians do not come to Costa Rica just to buy oil and other products, but also cigarettes for resale in their country, where a pack of cigarettes purchases here for us$1.50 sells for us$5 in Panama.

Costa Rica and El Salvador are the only countries that have not adopted anti-tobacco laws in Central America.